The big questions

What is the Capital Asset Pricing Model?

June 13, 2012

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Nobel Prize-winning economist William Sharpe outlines the Capital Asset Pricing Model, which he developed in the 1960s. The CAPM represents the most widely-recognised way of determining the rate of appropriate return for an asset, accounting for the expected rate of return of the market as a whole and the asset's risk premium relatve to the market.

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